10 July 2019
The European Banking Authority welcomed today's publication by the European Court of Auditors (ECA) of a special Report on the EU-wide stress test titled "EU-wide stress tests for banks: unparalleled amount of information on banks provided but greater coordination and focus on risks needed". The EBA acknowledged the efforts made by the ECA in providing valuable insights to improve the efficiency of the EU-wide stress test in the future.
The report is the result of an audit conducted by the ECA on the 2018 EU-wide stress test, while also considering aspects of the 2016 exercise. The findings of the independent review highlight the EBA's leading role in providing transparency of information on EU banks' data and acknowledge the great effort made by the staff in coordinating the exercise, especially considering the limited resources available.
The EBA takes note of the recommendations made by the ECA and welcomes the constructive challenges that the ECA's independent review provides, being cognisant that the EU-wide stress test can be improved further. Among the recommendations listed, the ECA prescribes to develop a top-down approach for stress tests to complement the current bottom-up approach, to expand the criteria to assess the sample of the exercise and to publish all banks' minimum requirements.
The EBA is committed to considering the ECA's recommendations in its ongoing discussion on possible longer-term changes to the EU-wide stress test. In addition, the EBA has already introduced greater transparency on additional own funds requirements (Pillar 2 requirements) in the 2020 EU-wide stress test draft methodology in line with the ECA's recommendation.
The EU-wide stress test has contributed to a significant strengthening of EU banks' capital positions, thus restoring confidence in the banking sector and increasing transparency on banks' exposures. The EBA will keep the ECA informed on the progress made in implementing the recommendations.